M.COM SEMESTER - IV (CBCS)
BUSINESS STUDIES (MANAGEMENT)
SUPPLY CHAIN MANAGEMENT LOGISTICS
Q.6 Explain supply chain intermediaries
in SCM in detail.
ANS:
Intermediaries or middlemen reference the
groups that work between farmers, processors, distributors and retailers and
fulfil a variety of connecting and facilitating roles. These groups usually
take the name of wholesaler, trader, distributor, importer or broker. Producers
Market is not against intermediaries. In fact, there are many examples out
there of value chains that require intermediary roles to facilitate farmers’
access to local, regional or diverse market channels. Intermediaries in the
supply chain can take risks, provide financing, set up sales, and manage
complex relationships with downstream buyers, distributors, and other
stakeholders. Supply Chain Management and Logistics
Types:
There are four commonly known types of
intermediaries, namely marketing agents, wholesalers, distributors, and
retailers.
Marketing Agents:
Marketing agents, sometimes also known as
brokers, are private individuals or firms that facilitate the selling of a
product. They usually act as marketers or representatives on behalf of the
sellers and don’t actually own the product that is being sold. The role of
these agents can be better understood by observing the role of a real estate broker.
Such intermediaries are paid a cut from the transaction, and they act only to connect
the buyer to the seller. Marketing agents are not only limited to the field of
real estate. Their services are commonly used across the international trade
scene, particularly in travel services. When companies cannot reach the desired
customers directly, they employ a marketing agency to help them make sales.
Wholesalers:
A wholesaler buys goods in bulk from the
producer and then sells them to retailers in smaller quantities, but these
quantities are still quite large for the individual consumers. The wholesale
business works on the simple principle that bulk buying results in a lower
per-unit cost. A wholesaler buys goods in bulk from a factory at cheaper rates
and sells them to retailers at a higher one, the cost difference constitutes
the wholesaler’s profit. For instance, a wholesaler purchases 5000 units of a
product from a producer at $1 each. A retailer only needs 500 pieces at a time,
but they’ll purchase it at $1.25 per unit from the wholesaler. Wholesalers are
fully independent intermediaries purchasing and selling all kinds of products.
They have no associations with particular companies. However, it’s up to the
wholesaler to choose whether they deal in a wide range of products or focus on
a specific niche. A key point about wholesalers is that they buy in bulk and
sell in bulk, only that their selling quantities are lesser than buying
quantities. Rarely do wholesalers sell directly to end consumers unless they
require an unusually large amount of goods.
Distributors:
A distributor works much in the same way as a
wholesaler. The only difference is that while a wholesaler does not have any
association with producers, a distributor aims to promote and sell the goods
from a specific producer only.
It could be said the distributor is a hybrid
of a wholesaler and a marketing agent. That is, they’re hired to market a
company’s products and are paid a commission for the sales they make. But their
mode of operation is in bulk, just like a wholesaler.
Retailers:
The retailer is the last intermediary link in
the supply chain that leads up to the consumer. These are the individuals or
firms that customers go to buy products for day-to-day use. Retailers source
large quantities of goods from wholesalers and sell them to customers in
whatever quantity the average person buys a specific good.
Yet again, the sequence of increasing
per-unit costs continues as the retailer sells each unit at a higher price to
the customers. The retail business is all about advertising products to the
wider population and making it easier for them to buy conveniently.
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